The formalisation of the entropy law by Rudolf Clausius in 1865 marks a shift in 19th century physics. By defining energy as a process, German physicists were able to shape the necessary epistemological instruments for the second industrial revolution. The Berlin School of Thermodynamics applied physics for industrialising the recently unified Prussian state, making energy an important site of state governance. The entropy principle, an economic abstraction of the entropy law, called for a stronger interconnection of science and economics. Facilitated by a pessimistic anthropocentrism of Hermann von Helmholtz, German physics pushed for the application of statistical thermodynamics to the real world. Thus, nature's chaotic energy flows were rationalised for them to be legible to the state. Based on archival research in Berlin and Munich, this paper tells the story of such development, by highlighting how the entropy principle became institutionalised for industrialisation. Next to Clausius paradigm shift in 1865, it focusses on the foundation of the Physical Technical Reich Institute in 1887 and the International Electricity Exhibition in Frankfurt in 1891. The latter introduced the centralised production and grid-like distribution of electricity, revolutionising modes of production in urban as well as rural spaces. The analysis of such socio-technical development of the energy system in the fin de siècle enables the necessary thrust to make wider claims about how environmentalism, changing modes of production and the craft of the state are intertwined. This has great relevance for the historicization of current modes of transition towards a low-carbon economy in Germany and beyond. Physical knowledges and institutional arrangements of the energy system were shaped in conjunction, establishing a certain path dependency to such developments.